By Kenya Confidential Economics Editor, Nairobi – November 2, 2016
African populations are getting fend up with corruption by governments whose ideology is self-aggrandizement by those in power
Rwanda’s Minister for Finance and Economic Planning, Claver Gatete has urged African bankers to combat financial and economic crimes noting that they remain one of the greatest threats both to corporates and governments around the world.
Gatete was officiating at the opening of the third Afreximbank annual Customer Due Diligence and Corporate Governance Forum at Kigali Convention Centre. His warning comes at a time when African populations are getting fend up with corruption by governments whose ideology is self-aggrandizement by those in power.
“Money laundering, bribery, fraud, tax evasion, among other illegal activities continue to exert dampening effect on the global economic and financial space and undermine opportunities for sustainable economic development,” Gatete said.
Illicit financial flows remain significantly high averaging around 40 per cent over the past two decades. Currently, the African Union estimates that Africa is losing more than Ksh 5 trillion ($50 billion) annually in illicit financial flows, but these estimates may well fall short of reality because of lack of accurate data for all African countries.
These illicit activities have significant implications for growth and economic development and financial soundness of banks and corporates.
“In an environment where there is a perception of prevailing economic and financial crime legitimate economic activity is undercut, investment discouraged, breeds further suspicion and undermines government legitimacy,” Mr Gatete explained.
According to Dr George Elombi, the executive vice president in charge of corporate governance and legal services at Afreximbank, the ongoing macro economic challenges facing the continent, notably withdrawal of global banks from the African trade finance space and acute shortage of foreign reserves following the end of commodity super-cycle and widening trade deficits pose a serious challenge to Africa’s financial industry.
“Therefore the implementation of sustainable customer due diligence and corporate governance practices by leveraging on technology and collaboration is critical and an important milestone towards building a strong financial sector,” Dr Elombi said.